Edified Equity Podcast Episode 76: Long Road to Recovery and Recession Obsession!

Edified Equity

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Today on Episode 76 of the Edified Equity Podcast I’m touching on our Long Road to Recovery and Recession Obsession

On episode 73, I reviewed Harvard’s 2019 State of the Nation’s Housing Report where I recalled long-time research economist Mr. Rafael Bostick, President and CEO of The Federal Reserve Bank of Atlanta commenting on recessions.

He stated recessions "do not die of old age" and noted how this recovery is different. It has been a long - slow recovery and, again, “recoveries do not die of old age.”

Despite all the buzz and recession obsession there are parts of the country where employment is not where it was pre-crisis. This means we haven’t fully recovered and, typically speaking, a full recovery comes before another crisis, or recession, so theoretically we still have room for more recovery. However, recession obsession is doing its best to overshadow the high demand for, and strength of, multifamily workforce housing.

Why is that?

The National Apartment Association’s Units Magazine says it’s simple “Negative news sells, and we are in the longest period of sustained economic growth the U.S. has ever experienced.”

There’s no doubt an economic slowdown is going to happen sometime - we’re guaranteed another one BUT the “steep downturn” that everyone is obsessing over may not occur.

Staying on topic specific to multifamily, demand is high, supply is low, vacancy rates are well below normal, affordable apartment communities are positioned to weather the economic storm, and performance remains solid.

Let’s put it into perspective from an investment point of view… According to The National Apartment Association 40% of US households are renters. One of the most significant economic issues America faces is affordable housing.

We’re 10 years post the housing crash and there still is not enough housing to keep up with the demand. There’s a clear lack of new completions in the Class B/C class space. We have HUGE need to fill, and service; furthermore, maintaining affordability is equally important. The National Apartment Association & The National Multifamily Housing Council say as a Nation we have a NEED to address and provide 4.6 million doors in order to meet the affordable rental demand over the next 12 years.

Whether you are a developer or part of an investment firm (passive or active side) that acquires, preserves, and manages existing affordable workforce multifamily apartment communities - we have an important role given the demand. See BLOG...